WORLD IMBALANCE OF NATURAL OIL - KEY POINTS

World Imbalance of Natural oil-Key points

-Dr.Debesh Bhowmik

[1]The world has ample proved reserves of oil and natural gas to meet expected future demand growth. At the end of 2011, global proved reserves of oil were sufficient to meet 54 years of current (2011) production; for natural gas that figure is 64 years.

[2]The distribution of global proved reserves of oil and natural gas – while essential for energy production – is not a good predictor of the distribution of future production growth. Indeed, the world’s oil and gas importing regions – Asia Pacific, North America, and Europe – are expected to contribute a disproportional share of the world’s oil and natural gas production to 2030.

[3]These countries sit atop just 16% of global proved reserves of oil and natural gas, yet they will account for 38% of global production in 2030, and will deliver one-third of the growth in global production.

[4]We project that the current decade will experience the most rapid growth in global production of tight oil and shale gas. After 2020, North American growth is expected to moderate, in part due to current assessments of the resource base. Continued, but more modest, growth elsewhere results in slower global production growth in the next decade.

[5]The global understanding of tight oil and shale gas potential is still evolving, however, and the range of external forecasts reflects the uncertain landscape. Different views on the North American resource base – in particular, whether to expect further growth – are the key factor behind the range of external forecasts. Elsewhere, varying assessments of above ground issues are another driver of divergent forecasts.

[6]These uncertainties could result in a significantly higher path for tight oil and shale gas production – as much as 5 Mb/d and 35 Bcf/d, respectively, by 2030. Additional supplies would have follow-on implications for the broader outlook: in the case of oil, for example, by reducing the market requirement for OPEC crude and boosting spare capacity.

[7]Growing production and flat consumption will see the US become nearly self-sufficient in energy by 2030. The US will remain a small net importer of oil, although net imports will decline by about 70%. With net exports of natural gas and coal, US energy production will reach 99% of domestic consumption, up from a low of 70% in 2005.

[8]China is on pace to match Europe as the world’s leading energy importer by 2030, and will replace the US as the world’s largest oil importing nation by 2017.

[9]However, the growth in Chinese energy imports will be taking place in a context of robust economic growth. Adjusting the volume of energy imports for expected economic growth will leave China relatively less dependent (per unit of GDP) than EU on imported energy.

[10]Other things equal, the development of energy imbalances point toward a reduction of global trade imbalances.

[11]Russia will remain the world’s largest energy exporter, with increases in exports of all fossil fuels. Net energy exports will rise by 25% in volume terms.

[12]By 2030, Saudi Arabia will be the world’s largest oil exporter, although the trajectory over time will be impacted by the likelihood of OPEC production cuts discussed earlier. By 2030, oil exports in volume terms are likely to be 17% above the 2010 level.

[13]As a region, Africa will become an increasingly important source of fossil fuel exports as well.

[14]Once again adjusting for expected economic growth, Russia – and the African countries as a group – are likely to remain significantly less dependent on energy exports than Saudi Arabia.

[15]Carbon emissions from energy use continue to grow, increasing by 26% between 2011 and 2030 (1.2% p.a.). We assume continued tightening in policies to address climate change, yet emissions remain well above the required path to stabilise the concentration of greenhouse gases at the level recommended by scientists (450 ppm).

[16]There is some progress: the changing fuel mix, in particular the rising share of renewables and substitution of coal with gas, results in a gradual decoupling of emissions growth from primary energy growth.

[17]Carbon emissions continue to fall in the EU – on the back of carbon abatement policies, support for renewables and declining overall energy demand – and in the US – driven by falling oil demand (efficiency gains in the car fleet), renewables in power and the displacement of coal by gas.

[18]The structural transformation of China’s economy slows its energy demand growth, especially after 2020 and especially for coal, causing a significant reduction in the growth of China’s carbon emissions.